US business activity picked up in March as orders rebounded for the first time in six months, according to a survey on Friday, which also suggested that inflation could continue to slow gradually.
S&P Global reported that the U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, rose to 53.3 this month. This was the highest reading since last May and followed a final reading of 50.1 in February.
It was the second month in a row that the PMI remained above 50, indicating growth in the private sector. A measure of new orders received by private businesses jumped to 51.2 from 48.5 in February. It was the first time since September that businesses generally reported growth in new orders.
"March has so far seen an encouraging resurgence of economic growth," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
The increase in orders was concentrated in the services sector, with orders in manufacturing still weak, although off the previous month's lows. The recent tightening of financial conditions after the failure of two regional banks cast a shadow over the prospects for order growth. There are concerns that the tightening of lending standards by banks could make credit less available to households and businesses.
On the other hand, the Fed raised its benchmark overnight interest rate by a quarter of a percentage point, but indicated it was on the verge of halting further increases in borrowing costs, in a sign of recent financial market stress.
A survey measure of prices paid by businesses for inputs fell to 59.8 from 60.4 in February. According to S&P Global, while raw material and supplier price increases have eased, firms report that higher wages increase cost burdens.
Services, which account for the bulk of the economy, drive overall domestic inflation. The survey's flash services sector PMI rose to 53.8 this month, the highest since April, from 50.6 in February. Economists polled by Reuters had forecast the services PMI rising to 50.5.
The flash manufacturing PMI rose to 49.3 which was still weak from 47.3 in February. It has now contracted for five consecutive months. Economists had forecast the index at 47. New orders fell for the sixth month in a row, although the rate of decline slowed.
